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Over half of the value of B2B receivables more than 90 days overdue were written off as uncollectable by businesses in Brazil, Canada, Mexico and the United States (the Americas).

The September 2014 edition of the Atradius Payment Practices Barometer, a survey of B2B suppliers in Brazil, Canada, Mexico and the United States, found that, on average, 38.4% of the total value of survey respondents’ B2B receivables were unpaid by the due date. 5.2% of the value of invoices extended more than 90 days overdue, and 2.7% - approximately 52% of the value of invoices 90 days past due - were written off as uncollectable. This compared to an average of 35% for Europe.

Survey respondents in the Americas maintain a strong focus on credit management. 81.5% of the respondents in the region reported employing credit management policies to mitigate B2B trade credit risks. Approximately 50% of the respondents check their buyers’ creditworthiness, request secure forms of payment or do both. These actions can help reduce payment defaults, but as survey responses indicate, they cannot completely eliminate them and uncollectable receivables remain a significant issue.

The impact of unpaid invoices on a businesses’ turnover or cash flow can be serious. Not only because non-payment by buyers costs a business time and money in respect to pursuing collection of debts, but also because bad debt reserves represent money that is unavailable for use in growing the business.

Replies to the survey highlight also that late payments led to a marked disparity between the average payment terms for the region (28 days) and the average Days Sales Outstanding (DSO) (48 days). A key credit management factor as this gap highlights the risk of non-payment large spreads between the two can present a real reason for concern. It is underlies why nearly one third of the survey respondents said that maintaining sufficient cash flow this year has been the greatest challenge to their business’ profitability.

David Huey, Regional Director of Atradius Trade Credit Insurance NAFTA commented: “The economy may be showing signs of recovery but late payments, defaults and business failures remain facts of life. The survey results simply underline the need for all businesses to be vigilant in their credit management and to protect cash flow and profitability against non-payment through instruments such as credit insurance.

This offers the most comprehensive protection against insolvency or payment default and can help reduce DSO, improve cash flow, and support more competitive payment terms.”

The complete report highlighting the survey findings of the 2014 Atradius Payment Practices Barometer for the Americas can be found as related content below.

About Atradius
The Atradius Group provides trade credit insurance, surety and collections services worldwide. With a presence through 160 offices in 50 countries Atradius has access to credit information on 100 million companies worldwide. Its products help protect companies throughout the world from payment risks associated with selling products and services on credit.

The statements made herein are provided solely for general informational purposes and should not be relied upon for any purpose. Please refer to the actual policy or the relevant product or services agreement for the governing terms. Nothing herein should be construed to create any right, obligation, advice or responsibility on the part of Atradius, including any obligation to conduct due diligence of buyers or on your behalf. If Atradius does conduct due diligence on any buyer it is for its own underwriting purposes and not for the benefit of the insured or any other person.
Additionally, in no event shall Atradius and its related, affiliated and subsidiary companies be liable for any direct, indirect, special, incidental, or consequential damages arising out of the use of the statements made information herein.